4.4.3 Controlling MNCs

Question 1

what factors affect the control of MNCs

Answer 1

political influence
legal control
pressure groups
social media

Question 2

describe political influences

Answer 2

Politicians can act to influence the operations and strategies of MNCs

Trade initiatives and trade delegations

• offering financial and non-financial support
  - hosting trade events
  
  • parliamentary visits abroad to promote UK industries

Subsidies and tax incentives
Protectionism
Trading blocs

Question 3

describe legal control

Answer 3

Regulatory controls
-competition policy
-employee legislation
- environmental protection
Taxation rates to influence location decisions
Both vary significantly between countries

Question 4

describe pressure groups

Answer 4

Organisations who fight to influence the actions of others for the good of a particular cause

Seek to influence:

• Government policies
• Consumer behaviour
• Business activities

Actions include:

• Media attention
• Protests and lobbying
• Boycotting

Question 5

describe social media

Answer 5

Social media is the use of virtual communities to communicate with actual and potential customers
e.g. the use of blogs, online forums, viral marketing, podcasts, social networking sites

Reach a wide audience including:
global reach
-younger demographic
-culture of sharing i.e. like, share, favourite, retweet etc.
-Powerful way to raise awareness using a range of media

Question 6

why is tax avoidance ok

Answer 6

• company’s objective is to make money for shareholders

- fault of governments not businesses

Question 7

why tax avoidance is bad

Answer 7

• unfair advantage over other businesses who pay tax
• less government tax revenues so less to spend on NHS and services which disproportions the poor
• money ends up offshore in tax havens

Question 8

why do governments allow companys to pay low tax

Answer 8

• attract more business, which increases employment opportunities , so less unemployment , ( less benefits, better health , improved skills ) more disposable income , more spending in local economies , more people paying tax and more corporation tax

Question 9

if MNCs are allowed to pay less tax why does it give an unfair advantage

Answer 9

• creates MNC growth , forcers smaller competitors out of business due to price competition , due to increased purchasing power, restricts diversity